Lev Leviev is going head-first against Bowlmor Lanes in Times Square
Africa Israel plans to throw a counterpunch after a $32 million lawsuit from its biggest retail tenant, Bowlmor Lanes, which accused the struggling real estate conglomerate of dragging its feet on the buildout of a 70,000-square-foot space at the old New York Times building.
Lawyers for the Israeli-based developer, led by billionaire Lev Leviev, said they will file suit in New York State Supreme Court alleging the Manhattan-based bowling alley chain is using some space it is not entitled to, and argues that it provided all the construction funds it was required to in a timely manner.
“The lease requires the landlord to make certain advances when the tenant makes qualified improvements,” said attorney Stephen Meister, representing Africa Israel.
Africa Israel lawyers said that Bowlmor is using about 2,500 square feet of space on the fourth floor of the 229 West 43rd Street tower, and they will serve an eviction notice today that gives the chain until Feb. 15 to get out of the space.
Meister said that Bowlmor was willing to have the space added to the lease, but negotiations broke down over use of the location. Lawyers for Bowlmor said they have not been served with any papers for the space, which they say is used for offices, so they will not comment further on that dispute.
Bowlmor, a Greenwich Village-based chain led by Tom Shannon, signed a 20-year lease to be the first retail tenant at old NYT building. Leviev, after buying the property for $525 million in 2007, tried to market the building to a major media firm, but then repositioned the struggling property for a combination retail, hotel and condominium site.
Bowlmor filed suit earlier this month alleging that Africa Israel dragged its feet on releasing funds for the bowling alley and entertainment center, claiming that the company delayed payment and deliberately tried to dump buildout costs onto the tenant because the building was in financial trouble.
“They repeatedly failed to pay out money,” Bowlmor’s attorney Jeffrey Klarsfeld told The Real Deal, who declined to elaborate on allegations about the landlord’s financial status. “We’ll rely on discovery and eventually it will come out what their financial position was.”
Africa Israel, which owns a number properties in New York, including the Apthorp condo on the Upper West Side, previously negotiated a deal to renegotiate its debt with Israeli bondholders, where the firm is based. It would not comment on the overall financial health of the company.
Meister said that the 20-year lease with Bowlmor called for Africa Israel to release $6.7 million to renovate the space, which includes 50 lanes, a sports bar, a nightclub and other amenities. Meister said that about $6.4 million of those funds were released, and the agreement allows for 10 percent of the funds to be held back, but that the landlord is only holding back about 5 percent of the funds.
Bowlmor is currently tied up in a separate lawsuit at the building.
Manhattan-based retail broker Lansco alleges it was cheated out of a $1 million commission by Bowlmor and rival brokerage GFI Capital Resources Group.
Lansco, in the April 2010 suit, claims it had an agreement to represent Bowlmor, which was searching to expand its chain of bowling alleys around the city. Strike Holdings, the parent company of Bowlmor, operates bowling alleys under the Strike brand name in other parts of the country, including Bethsda, Md., Miami and two locations in California.
Lansco says Bowlmor conspired with GFI to take over the deal and signed a lease with Africa Israel. The lease is valued at $4.5 million per year in rent, and will go up over time, according to court filings.
Judge Doris Ling-Cohan, who approved and dismissed several claims and counterclaims in the Lansco suit, noted that GFI principal Lon Rubackin was not a licensed real estate broker or salesperson at the time the Bowlmor lease was negotiated in 2008, but his license was valid between March 2009 and March 2011. Rubackin was not immediately available for comment, and Meister said the ruling would not have any impact on the validity of the lease.
Klarsfeld said he viewed the rulings “favorably,” as the judge refused to dismiss some of Bowlmor’s counterclaims against Lansco.
Officials are still waiting to hear who will be named as the luxury hotel tenant at the property.
Bids were scheduled to be submitted in October for the new hotel. Meister declined to comment on the hotel portion. Newmark Knight Frank, which is marketing the property to prospective hotel partners, declined to comment. GFI and Lansco were not immediately available for comment.